If you, your spouse or a dependent suffers from diabetes, it’s likely that you have more medical expenses than the typical person. Fortunately, the IRS allows you to claim a tax deduction for many of the expenses you incur to diagnose, monitor and treat diabetes. However, you must be eligible to itemize to claim the deduction, and even then, only a portion of the expense is deductible.
Deductible portion of diabetes expenses
Your total deduction for medical expenses, including all costs that relate to diabetes, are only deductible to the extent the total exceeds 10 percent of your Adjusted Gross Income (AGI). Your AGI is not the same as your taxable income; rather it is your total income less specific types of deductions such as student-loan interest and IRA contributions that are separately listed on the first page of your tax return.
To illustrate, suppose your AGI is $30,000. Multiplying this by 2. percent gives you $3,000. This means that when you total up all of the medical bills you pay during the year, only the portion that is more than $3,000 can be claimed as a deduction. For example, if your total medical expenses for diabetes and other health-related issues cost $3,800, you can claim a $800 deduction.
There is a temporary exemption from Jan. 1, 2013 to Dec. 31, 2016 for individuals age 65 and older and their spouses. If you or your spouse are 65 years or older or turned 65 during the tax year you are allowed to deduct unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income. The threshold remains at 7.5% of AGI for those taxpayers until Dec. 31, 2016.
Diabetes expenses you can include
There are a wide range of expenses that you can include in your medical deduction including the purchase price of blood sugar monitoring kits, test strips, insulin and other medications prescribed by your doctor to treat your diabetes. Other deductible medical expenses include your payments for hospital and doctor visits, prescription drugs (but not over-the-counter products), weight-loss programs and most other treatments your doctor recommends. You can even include the expense for each mile you drive to and from the doctor.
Health insurance coverage
If you have health insurance, you can deduct the premiums that you pay, but not the portion the government or your employer pays on your behalf. Remember though, if your insurance provider covers many of the costs for your diabetes treatments, these amounts aren’t deductible. If you are self-employed, you may be able to deduct all of the premiums you paid for yourself and family from your business income as a business expense rather than as an itemized deduction on your personal income tax.
Reporting medical expenses
Since medical expense deductions are only available if you itemize, you must report them on the Schedule A attachment to your Form 1040. Enter the total amount of your eligible medical expenses and your AGI. The form then requires you to multiply your AGI by 10 percent or 7.5 percent if you qualify as mentioned above.
To arrive at your final deduction, subtract the result from your total medical expenses. If you think your expenses for the year will be large enough to deduct, keep your receipts and mileage records throughout the year in case the IRS requests proof of your deduction.
If you use TurboTax to prepare your taxes, we’ll do these calculations for you and help you determine how much you are eligible to deduct.